Corporal punishment of kids was banned in 2007 in New Zealand. Understandably, the government wanted to stop excessive physical punishment to protect vulnerable children. Psychologists the world over argue how positive strategies, rather than fear and threats build trust and stronger relationships. That fairer, more understanding approaches are much more effective at creating better behaviours.
How a harsh punishment might force compliance in the short term, but in the long term can cause real harm. Unfortunately the debt collection industry has been slow to acknowledge this. Typically, harsh financial punishments are the norm, including adding hefty fees to force people to pay up no matter their situation. Causing a lot of unnecessary financial pain and hardship.
We don’t think that’s fair, believe there’s a better way and we’re doing something about it. DebtManagers is on a mission to help create a fairer financial world where everyone thrives. That’s why our organisation is transforming the way companies recover bad debt. Through positivity not punishment. Debt management, not debt collection. As a cornerstone of this approach, we never punish already stressed customers by piling punitive fees on top of debts they’re already struggling to repay.
What’s more, it’s often misunderstood or appreciated just how commonplace bad debt is. As an indication, over 566,000 low-income Kiwis owe $3.5 billion to the Government alone in fines, tax and other unpaid debt. In addition to this staggering figure, New Zealander’s household debt increased by a whopping 29% from the year ended June 2018 to June 2021. Along with inflation running at 5.9% it means all Kiwis, your everyday customers, are under more financial pressure than ever. In this environment, it’s no wonder many ordinary Kiwis run into financial strife and are finding it more difficult to fulfil their obligations. So it doesn’t make any sense to put them into a position where it becomes 20 – 30% more difficult to ever repay the money.
To provide context, 20 – 30% is added to the debt after it has defaulted, penalising those trying to do the right thing by paying off their debt. What’s more, we believe it just isn’t right to add pressure to people who, in all likelihood, are also struggling to put food on the table, pay heating bills, rent and all the rest. Unfortunately, the practice of adding these fees isn’t something most companies have eyes on. The agents who represent them take the fees for themselves so it’s not in their interest to shout about it. Yet their customers suddenly have a higher hurdle to jump on top of the money they already owe. So the same companies probably aren’t aware how these sorts of aggressive financial penalties serve to drive customers in debt away from ever returning to their brands.
You might say, well that sounds pretty bad, but how do you recover the money then? Is there a better way?
- The answer is yes, there is. In fact, companies all over New Zealand already trust DebtManagers to deliver financial certainty to their bottom line and protect their company’s reputation too.
How do we do it?
- Well, the other fundamental approach that sets us apart from the rest of the industry is our commitment to purchasing your bad debt book for a fair percentage.
It provides you with early cash realisation of your bad debts and gives us the long-term ability to rehabilitate your customer. By investing time and I have to say real expertise, we gain insightful understanding into each individual’s ability to repay the debt, and then design customised, sustainable repayment plans to match that ability. By rejecting the more aggressive fee method, we gain the trust of those owing the debt and, once they’ve repaid the money, their improved credit rating allows them to return to you as a valuable customer again. What’s more, we find the customers we guide out of debt have learnt new financial literacy, making them better prepared to service debt next time. So everyone wins.
Every day, we’re using management, rather than collection, to help companies and customers make bad debt good. And if you choose DebtManagers to manage your customers out of debt, I know our team will ensure a positive outcome for your bottom line and a positive difference to the communities we work within.
Talk to us if you want to know whether our debt management approach will be the right fit for your company to recover bad debt.
